Week in review
- RBA holds rates at 0.75%, downgrades growth outlook
- Australia retail sales -0.5% m/m
- China PMI manufacturing dips to 51.1
- NAB business confidence
- Westpac consumer confidence
- Housing finance
Thought of the week
The economic data out for Australia in the last few weeks has been mixed, but the message from the RBA is much clearer. They are ready to cut if needed, but do not see that need being very high given the economy is tracking close to their forecasts. The RBA has cut their growth forecasts for the coming year, reflecting the impact of the coronavirus and bushfires on the expected activity in the first half of the year. The average growth rate over 2020 is 25bps lower to 2.25%. This creates a new benchmark for the RBA to assess the outlook and means that misses on growth won’t necessarily lead to rate cuts. However, the forecasts are based on current market pricing for interest rates, which is still for a rate cut this year.
Market still pricing a rate cut, but later in the year
Market implied cash rates in Australia
JPMorgan Global Research Enhanced Index Equity Fund
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